Don’t Trust That Internet Mortgage Calculator

Most people who finance a home will wrap their homeowners insurance into their monthly mortgage payment. This creates a surprise for some house hunters who use online mortgage calculators to figure out how much they can afford.

While a plethora of things exist that influence how much you will pay in premiums, such as the deductible, previous claims, etc., we will focus only on three easy-to-remember areas that we’ve found commonly slip the mind of those shopping for a home: construction materials, age and location. *Remember this article is aimed at helping you to realize a lot of factors can affect your monthly mortgage payment – please consult a licensed insurance agent for details and when shopping and getting quotes for insurance.*

Homes mainly made from wood will typically carry higher insurance premiums than ones built from brick. In fact, a masonry house will almost always carry lower insurance than a structure built from flammable materials — all things else being equal.

Age is important, too. Older homes typically have older roofs, electrical systems and plumbing, among other things. Insurance underwriters can view this as risky, raising the cost of insurance.

In real estate, there is an age-old adage, “Location, location, location.” It also holds true for insurance. Obviously, a home that is in a flood zone will need a flood-insurance policy in addition to homeowners insurance. Other things to consider about location include, but are not limited to, the crime rate and the building costs in the area. You can check the crime rate by reading the FBI’s “Uniform Crime Report,” a yearly report that breaks down the numbers for violent crime and property crime in your area.